Category: Bakery & Baked Foods

KANSAS CITY, MO. — The question on everyone’s mind at this year’s ninth annual Ag Outlook Forum, organized by Agri-Pulse and the Agricultural Business Council of Kansas City, was, “How do we feed a growing population of 8 billion people?” Speakers from a vast array of agricultural backgrounds offered solutions and insights into this worldwide problem as well as a rundown on the state of the agriculture sector at large.

One of the opening speakers at the 2023 Ag Outlook Forum, which was held at the Kansas City Marriott Downtown on Sept. 25, was Hans Kabat, president of Cargill Protein North America.

Kabat addressed how Cargill is navigating current industry challenges, including climate change, new technologies, rural flight and shifting economics that lend to the difficulty of feeding the world.

“Change is a constant in our industry, and lately change has been happening at a dizzying rate,” he said. “We need to imagine new possibilities for us. From our perspective at Cargill, we think it’s possible to reframe these challenges as opportunities. It’s led me to believe that all of us — and those of us in the food industry in particular — have a good reason to be optimistic.”

Driving that optimism is innovation and collaboration.

“As a partner to farmers, NGOs, industry groups, governments and manufacturers, we know that all of us need to work together to solve those problems,” Kabat said.

Within the past couple years, Cargill has launched two programs to help facilitate a combined effort across the agricultural community to improve sustainable practices.

The BeefUp Sustainability program, which was organized in partnership with Cargill, Nestlé and the National Fish and Wildlife Foundation, supports regenerative agriculture of 1.7 million acres of the United States’ land over the next five years. Through this initiative, Cargill estimates that 845,000 tonnes of carbon dioxide will be sequestered.

BeefUp provides technical and financial support for ranchers to implement regenerative practices through a $30 million investment into the program.

Future investments are expected to come through 2030, totaling $80 million and impacting 5.2 million acres of land.

In 2021, Cargill launched its RegenConnect program, which compensates farmers for adopting climate-friendly practices. That program expanded to reach farmers in Europe in May this year.

Since its inception, RegenConnect has had around 1,000 farms and 625,000 acres enrolled in the program, and $7 million in cash payments have been given to farmers.

“By providing farmers financial incentive for positive environmental contributions, we can help mitigate climate change, improve soil health and decarbonize the global food supply,” Kabat said.

Farm Bill in the throes

Stakeholders wait anxiously for the finalization of the 2023 Farm Bill to bring additional solutions to the food insecurity crisis and bolster the support for producers working to feed the world.

Joining a panel moderated by Blake Hurst of Hurst Farms, and former president of Missouri Farm Bureau, were Congressman Tracey Mann (R-Kan.) and Congresswoman Sharice Davids (D-Kan.). Mann and Davids offered a look at ongoing discussions within the Agriculture Committee.

With the expiration date for the current Farm Bill coming up on Sept. 30, Davids confirmed that the ag committee is not optimistic about passing the bill before then. Nevertheless, she assured attendees at the Ag Outlook Forum that the Senate and House of Representatives are prioritizing passing the bill.

“There is a sense of urgency for both the folks in the Senate and the House to get this done,” she said.

Mann pointed out that as the end of the crop year rolls around on Dec. 31, crop insurance policies and related regulations will revert back to the original legislation passed in the 1930s without a new amendment or an extension of some kind. Seeing as “no one wants to go back” to outdated policies, Mann said he was confident an extension would be issued if the 2023 Farm Bill is not enacted by that time.

“I think we have got to remember that Farm Bills are five-year policies for a reason,” he said. “Long enough to provide certainty for our producers but short enough so that we are looking at these policies and making sure that we are updating it and it’s changing with the times.”

While the Farm Bill consists of 81% food nutrition policies, both Mann and Davids still placed crop insurance and agriculture research as top priorities for the legislation.

Despite the challenges Congress faces in reaching agreement on the Farm Bill, Hurst noted that the legislation has held strong for almost 90 years and has greatly improved farmers’ average household income.

“It is important to remember that in 1934, when my grandfather signed that first contract, farm households were about 40% of the average household income,” Hurst said. “Today, farm households enjoy an income that’s around 120% of the US average. Gratitude for the hard work that has gone into 90 years of farm bills is in order.”

SOLON, OHIO — Nestle USA plans to lay off 77 employees at its facility in Solon, according to a Worker Adjustment and Retraining Notification (WARN) filed Oct. 31 with the Ohio Department of Job and Family Services. 

“As we set ourselves up to best serve our consumers now and for the future, we must stay ahead of the changing market and consumer trends,” Nestle said. “We are making changes to some of our Solon teams, which unfortunately results in the elimination of certain positions. We are committed to supporting all people impacted throughout this transition. Solon continues to be an important hub for many of our US businesses.”

The layoffs are expected to begin on Dec. 31 and continue through Aug. 2, 2024, the company said.

VEVEY, SWITZERLAND — Tombstone, a pizza brand of Nestle SA, is launching tavern-style pizza.

The new offering comes in two varieties: the Primo, which features pepperoni, sausage, banana peppers, red onion, tomato sauce and mozzarella cheese on top of thin crust; and Let’s Meat Up, which features pepperoni, pork belly crumble, tomato sauce, rich cheddar and mozzarella cheese on top of a thin crust.

The Tombstone tavern-style pizza will be available at select retailers starting in April and will expand availability in July for a manufacturer’s suggested retail price of $6.99.

MADISON, WIS. — Nestlé Purina PetCare is laying the groundwork for an expansion of its wet pet food manufacturing facility in Jefferson, Wis., according to an announcement from Governor Tony Evers on April 25. The company has invested $195 million to increase the site’s production capacity by almost 50%.

The expansion will add 35,000 square feet to the existing plant, which has been operating in Jefferson since 1910, according to Evers.

“We are thrilled that Nestlé Purina is moving forward with expanding its Jefferson facility and that we could be a partner in helping support this effort, which will bring roughly 100 new jobs to the community,” Evers said. “Nestlé Purina has a more than 100-year history in our state, and we are excited to celebrate this world-class brand’s commitment to seeing many more years of continued success and local economic development in Wisconsin.”

Purina produces its Pro Plan, Fancy Feast and Beneful Incredibites in Jefferson. The facility currently employs more than 250 people in the area.

“The expansion of Nestlé Purina’s facility is a testament to the strong relationship between our city and the business community,” added Jefferson Mayor Dale Oppermann. “We applaud Nestlé Purina for its continued investment in Jefferson, which will enhance our economic vitality and create a more promising future for all who call our city home.”

According to Purina, the Jefferson expansion is part of the company’s overarching strategy to fortify its manufacturing footprint. The company recently cut the ribbon at a pet food facility expansion in Eden, NC, and expects to complete a greenfield plant in Ohio within the next 12 months.

The company expects to spend $2 billion on capital expansion projects between 2020 and 2025.

“Investing in our Jefferson factory deepens our roots in the community while helping us provide pet owners across the northern part of the United States with the trusted, science-based pet foods their dogs and cats love,” said Nolan Terry, chief technical officer for Purina. “We remain focused on safety, quality and sustainability in our operations and appreciate the state and local partners who have supported our continued growth.”

The Wisconsin Economic Development Corporation (WEDC) has approved up to $1.7 million in tax credits for the company for the next five years, and the City of Jefferson is prepared to provide up to $2 million in financial assistance over the next 20 years to assist with project costs.

“Nestlé Purina is an iconic global brand whose continued investment in Wisconsin underscores our state’s ability to compete on the world stage,” said Missy Hughes, secretary and chief executive officer of the WEDC. “This is a huge win for our state and for the people of Jefferson and surrounding communities.”

 

 

VEVEY, SWITZERLAND — Nestle SA reined in its full-year sales guidance, as chief executive officer Ulf Mark Schneider cited a tough consumer environment in reporting improved but mixed results for its fiscal 2024 first half.

Net earnings in the first half came in flat at 5.6 billion Swiss francs ($4.98 billion), though a gain in net profit margin lifted earnings per share by 1.8% to 2.16 Swiss francs ($1.92) on a reported basis. In constant currency, underlying EPS rose 3.3% to 2.51 Swiss francs ($2.23), while reported underlying EPS was down 1% to 2.40 Swiss francs ($2.13).

Companywide organic growth for the first six months of the year edged up 2.1%, reflecting real internal growth (RIG) of 0.1% and a 2% uptick in pricing, according to Nestle. The global food and beverage giant said reported sales fell 2.7% to 45.05 billion Swiss francs ($40.05 billion) from 46.29 billion Swiss francs in the prior-year period, including negative impacts of 4.4% from foreign exchange and 0.4% from net divestitures. That compared with 1.4% organic growth and a 5.9% decrease in reported sales for the first quarter.

“As we enter the second half of the year, we remain confident of our RIG momentum, but the pricing environment has become more challenging,” Schneider said in remarks on first-half results. “The general context is that consumers are under pressure, driving higher price elasticity, particularly in the US market. Increasingly, this has contributed to pressure on pricing as consumers seek value. The swing factor lately is increasing competitive intensity to address this environment. Retailers are competing for their share of a tighter consumer budget. Food and beverage companies, in turn, are responding with a whole new level of promotional intensity across categories. We have seen pricing coming down faster and are now reflecting it in our outlook.”

Nestle trimmed its full-year 2024 growth forecast for organic sales to “at least 3%” from the previous projection of “around 4%.” Likewise, the company now expects mid-single-digit growth in underlying EPS in constant currency, down from the earlier estimate of a 6% to 10% increase. The prior outlook of a moderate gain in underlying trading operating profit margin was reaffirmed.  

“Given how the environment has unfolded, we consider it prudent to amend our guidance for the full year,” Schneider said.

For Nestle’s North American business, underlying trading operating profit was flat at 2.7 billion Swiss francs ($2.4 billion) for the first half, with margin ticking up 20 basis points to 21.8%. Pricing was up 1.4%. Reported sales dipped 2.5% to 12.23 billion Swiss francs ($10.87 billion) from 12.55 billion Swiss francs a year earlier. Organically, growth was down 0.1%, with RIG for the half declining 1.5% but turning positive in the second quarter at 2.8%. Foreign exchange had a negative impact of 2.5%.

“We said North America would see a RIG improvement in the second quarter, and the zone delivered that,” said Anna Manz, chief financial officer at Nestle. “The RIG swing from negative 5.8% in the first quarter to positive 2.8% in the second was significant. The second quarter RIG benefited from larger-than-usual orders from some retailers ahead of key July promotional campaigns. This phasing impact means that the zone’s continued RIG improvement won’t be linear in the second half.”

In North America, Nestle said it generated market share gains in pet food and coffee for the first half but saw share shrinkage in frozen pizza and coffee creamers.

“Purina PetCare continues to be the largest growth contributor, gaining RIG momentum and market share despite ongoing category normalization post-COVID and the recent inflation spikes,” Manz explained. “In addition, Zone North America progressed on the turnaround of frozen food, which swung from negative growth in the first quarter to positive in the second. New product launches in this business included expanded offerings for DiGiorno’s Ultra-Thin Crust pizzas and Stouffer’s Classic Single Serve. These innovations are aimed at catching those consumers who are seeking more affordable price points.”

By product category, the North American business tallied sales growth of mid-single digits in pet care, water and flavored water and confectionery, the latter led by Toll House in the United States and Kit Kat in Canada, Nestle said. Sales were roughly flat in beverages but decreased in infant nutrition and frozen food, a category that Nestle said is experiencing soft consumer demand and stiff price competition.

“Overall, in zone North America, we are seeing improving market share trends, largely driven by high-growth channels that are not widely tracked by third-party providers,” Manz said.

Those channels include e-commerce, warehouse clubs and pet specialty stores, which had double-digit sales growth in the second quarter and represented 80% of the North American zone’s quarterly growth.

“It’s very important that we do not over-interpret this snapshot here of Q2 2024 and now see that as the movie unfolding going forward,” Schneider told analysts in a July 25 conference call, referring to Nestle’s companywide results. “This is a very particular moment in time, with some tricky year-over-year comparisons, since we had taken price in some categories and geographies in Q2 last year. Also, it’s a moment in time where we’re still seeing significant value-seeking behavior on the part of the consumer, their stress in particular at the low end of the income scale in North America but also in select other geographies.”

Nestle has been “particularly strong” in its promotional intensity, Schneider noted. “From past quarters, we were very much focused on getting the RIG flywheel moving again, and that’s very important for continuous and sustained success. But we’re in no mood here to buy RIG going forward. Clearly, your RIG needs to be earned through compelling product and brand propositions going forward.”